CSX Posts Disappointing 4th Quarter Net
East coast rail and intermodal carrier CSX Corp. (NYSE: CSX – $29.23) announced fourth-quarter 2013 net earnings of $426 million, or $0.42 per share, up slightly from an adjusted $0.40 per share in 2012, but a penny below consensus expectations. Fourth-quarter revenue increased 5% to $3.0 billion, driven by broad-based strength in the company’s merchandise and intermodal markets and was more-or-less in line with Wall Street estimates. Operations were resilient in the quarter, despite increased volume and challenging winter weather at the end of the quarter. Intermodal volume, which measures the movement of freight by two or more modes of transportation, grew 11%. While coal volume fell 5%, merchandise shipments grew 7%, as volume for chemicals, autos, metals and agricultural products increased, offsetting more modest declines for minerals, phosphates and fertilizers and food and consumer goods. While the company did not offer any specific guidance, its press release stated that it is looking forward to “a favorable outlook for (a) majority of (its) markets in 2014”. Most analysts have full year earnings pegged at an average $1.97 and I am looking forward to a dividend increase in mid-year. The shares are at a 52-week high, but may come under pressure in the short run once the market digests these rather unremarkable quarterly results, thus providing a possible entry point for the aggressive investor. I believe CSX’s operations will continue to improve along with a growing domestic economic backdrop and total returns to late decade are worthwhile.